Will dark stores be the dark horse in this age of ever-increasing demand

“Invention, it must be humbly admitted, does not consist in creating out of void but out of chaos.” ― Mary Shelly

Chaos. 

That was the state of supply chains in 2020 due to the Covid-19 pandemic. 

While the situation is undoubtedly better now, one has to accept that the chaos created by the pandemic has accelerated many trends. Amidst all the chaos, there definitely was an increased pace of innovation and adoption of new ideas and technologies.

One such trend that has now become a part of the mainstream is ‘dark stores’. 

What exactly are dark stores?

The immediate image that pops up in one’s mind when you hear the word ‘dark store’ is that of… well, yeah..a ‘dark’ store. It is exactly how you’d imagine it to be. These stores aren’t lit up to make it eye-pleasing for customers but are rather strategically placed in very ‘normal’ buildings to ensure quick fulfillment of local online orders.

Trained personnel in these stores know precisely where a particular item is placed and quickly go about picking it. With more shoppers going online due to the pandemic, dark stores have become a critical aspect of various sectors like grocery, clothing, and home goods.

Even though this trend has been in the works over the last couple of years, the pandemic accelerated the adoption. It has, in a way, given a lifeline to struggling stores.

The grocery sector has benefitted hugely from this trend, and it presents a unique opportunity for dark stores, almost as if the very concept was made for it. 

What’s unique about grocery?

➮ SKUs, SKUs, and more SKUs – Think of something as ordinary as a cookie. There are so many brands, and each of these brands has so many varieties of cookies. A customer could want one particular type of cookie from a specific brand. But, you don’t know which, and hence you need to stock them all. Think of this same problem across all the products you use daily. Dark stores are immensely helpful in this scenario as space can be optimally used to stock all the popular varieties of items to ensure efficient pickup and delivery and not really bother about ‘in-store’ customer experience as customers don’t ever come into this store. 

➮ Time and tide and…perishables wait for none – Can you ensure that every order reaches in its prime form to the customer? Customers expect fresh produce, fresh fruits, fresh meat…fresh… well, you get the drift. A typical order could consist of both perishable and non-perishable items. A dark store must have all the necessary facilities to ensure that all customer requests are met. More importantly, it can and must be optimized for speed. In an era of instant gratification, saving a few seconds in finding each item means an overall saving in time, resulting in quicker delivery and higher customer satisfaction. 

➮ Customer is King/Queen – Big time cliche. Agreed. But, one can’t deny the fact that it is true. Customers these days want delivery at their preferred time slot. Based on the customer’s chosen fulfillment timeframe, the online grocer needs to plan the pickup accordingly so as to ensure that the items are in the best possible condition. 

Benefits of dark stores

Happenings around the globe

• Amazon-owned Whole Foods’ Brooklyn store is dedicated to fulfilling online orders. This store is the company’s first purpose-built online-only store. 
• Grocery chains Stop & Shop and Hy-Vee, based in Iowa, are already experimenting with turning stores dark. 
• Bed Bath & Beyond plans to convert a quarter of its locations into dark stores.
• Food distributors, whose sales took a hit due to the pandemic, turned their refrigerated facilities into dark stores. Given that there is less volume to move, these distributors partnered with grocery wholesalers and managed to stay afloat.

What role can logistics play in enabling smooth operations?

With grocery demand becoming more dynamic with each passing day, brands have to bring in the right technology in logistics to manage their operations. Here are a few things that technology can help with- 

• Route planning and optimization solutions can help plan day-to-day dispatch activities from your dark stores to customer locations, thereby automating manual planning processes and bringing in more accuracy.
• Route optimization also comes up with the shortest, most optimal, and cost-effective routes while accounting for various business and on-ground constraints. This will help reduce fuel costs and improve delivery efficiencies significantly. 
• Last-mile visibility tools allow businesses to track the movement of goods through the supply chain, right from when it is packaged and dispatched till the time it reaches the customer’s doorstep. Customers can also get real-time visibility into their orders with a specialized tracking link, thereby building a sense of trust and transparency.
• With increasing dynamism in orders, network planning plays a crucial role in ensuring customer delight. Network planning software can help you decide where exactly to open your dark stores by accounting for order density, SKUs required, etc. 

What’s the future of dark stores?

When the pandemic subsides, consumers will face a new normal. Shoppers who have experienced the convenience of online grocery shopping will most likely stick to it. Many stores may still limit the number of customers inside at a time or instill social distancing measures, and dark stores will help ease the ‘in-store’ burden. 

Soon, permanent dark stores, especially in grocery chains, could disrupt the supply chain, and just depending on pen and paper methods will not be the ideal way forward. Brands will need to develop a full-blown dark store strategy that includes everything from network planning to last-mile delivery. Automation could play a huge role in streamlining the processes and making the strategy a success. 

Dark stores might after all be the dark horse in this age of ever-increasing demand!